Offshore Wind: Expensive but Politically Popular

Offshore Wind: Expensive but Politically Popular

Kaplan says only state intervention sealed the deal between project developer NRG Bluewater Wind and Wilmington-based Delmarva Power. Delaware regulators changed state rules, more than tripling the credits Delmarva will earn toward the state’s renewable portfolio standard and enabling it to spread the cost to rate-payers. “In the end, the state had to step in to make the costs more palatable,” says Kaplan.

There is, as yet, no sign of government sweeteners for Cape Wind, but it is clear that it enjoys strong political support. “Cape Wind will be built,” says Musial. “The approval from the top of the U.S. government shows there’s political will to do this.”

Musial adds that the president’s budget proposal for 2011 requests $49 million for offshore wind R&D–the first targeted request for offshore wind–provides another “significant signal that offshore wind is on the table as a new direction for the Department of Energy.”

Still, building the offshore wind industry in the U.S. could be a slow process. Cape Wind says it hopes to begin construction this year, but Kaplan bets that Cape Wind will likely generate power in 2013 at the earliest. Further projects in the pipeline are years away, he says, mostly due to the federal environmental review process.

Then there is the challenge of developing the infrastructure to build, install, and maintain offshore wind turbines, their foundations, and the underwater power lines to link them with shore. Musial says that incentives introduced in Ontario recently could accelerate that process by creating another North American foothold for offshore wind power. Ontario’s feed-in tariffs for renewable energy, akin to price supports that many European countries provide, guarantee a price of 19 cents per kilowatt-hour for offshore turbines installed in the Great Lakes.

Kaplan estimates that 8,100 megawatts of offshore wind power will be installed in the United States by 2025, with most of the construction taking place starting in 2018. That is still a fraction of wind power installation in the U.S., which Kaplan expects to reach 192,000 megawatts by 2025. But it could go much further according to 2008 report from the DOE, in which it determined that wind energy could provide 20 percent of U.S. power by 2030. In that scenario, shallow offshore wind farms provide fully 54 gigawatts of the 300 gigawatts envisioned.